The Rise of Risk: Value-Based Care Payments Increasing Year Over Year

As we look forward to the release of ACPLAN’s 2022 Alternative Payment Method report, let’s review data from their previous six annual reports. One clear takeaway is that Value-Based Care payments increasing year over year is a trend that shows no signs of stopping. Trend lines point to the inevitable rise of Full Risk, but slowly – as most of the year-over-year movement is coming from transitions from FFS linked to quality to full VBC models.

 

Overview

 

The APM Framework is the LAN’s landmark achievement, establishing a common vocabulary and pathway for measuring successful payment models. Originally published in 2016 and refreshed in 2017, the Framework classifies Alternative Payment Models (APMs) in four categories and eight subcategories, specifying decision rules to standardize classification efforts. It lays out core principles for designing APMs, which have influenced payers and purchasers, and forms the basis of the annual APM Measurement Effort. Private payers like Anthem use the Framework to set value-based payment goals, and at least 12 state Medicaid agencies use it to set value-based purchasing requirements in contracts with managed care organizations.

From the HCPLAN, Health Care Payment Learning & Action Network

 

HCPLAN APM alternative payment model Framework- Value-Based Care Payments Increasing

 

HCPLAN Annual Reports show Increasing Value-Based Care Payments

 

Within the constructs of this framework, the LAN publishes a yearly report of dollars spent across the four categories, from Category 1(traditional Fee-For-Service or other legacy payments not linked to quality), Quality Category 2 (pay-for-performance or care coordination fees), and Categories 3 & 4 (VBC arrangements with shared savings, shared risk, bundled payment, population-based payments, integrated finance and delivery system payments). 

Industry trending toward VBC, Risk, Value-Based Care Payments Increasing

 

By plugging in data from their annual reports, we can see that the market-share of the various payment models has been shifting toward categories 3 & 4, VBC arrangements with shared savings, shared risk, bundled payment, population-based payments, integrated finance, and delivery system payments. 

FFS vs Quality vs VBC Chart - Value-Based Care Payments Increasing

 

 

The trends are clear and compelling: dollars spent in category 3 & 4 payment models are steadily rising, category 2 (pay-for-performance or care coordination) is declining, and Fee-For-Service is gradually shifting downward.

 

 

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Since releasing their first report in 2016, HCPLAN has been tracking not just the dollars spent, but the trends over time. The below graphic shows one view of the data, as dollars spent increase across all payment models, but does not show the changing position of the various models. 

 

CMS Innovation Center Goals  Dictate Value-Based Care Payments Increasing

 

The CMS Innovation Center has stated that the goals of their strategic direction are that:

 

  • All Medicare fee-for-service beneficiaries will be in a care relationship with accountability for quality and total cost of care by 2030.
  • The vast majority of Medicaid beneficiaries will be in a care relationship with accountability for quality and total cost of care by 2030.

 

While the 2030 goal appears ambitious, the trend-lines are trending in that direction. Not only is Value-Based Care increasing as a total percentage of all payments, but specifically categories 3 & 4 are increasing against category 2. The movement is both away from Fee-For-Service and moving toward full risk models.

HCPLAN Annual Reports Demonstrate Increasing Value-Based Care Payments

 

Below, we have linked all the HCPLAN data from previous year’s studies, with links to their interactive reports. The data is clearly pointing to Value-Based Care payments increasing, year-over-year.

 

 

2015 HCPLAN Value-Based Care Payments Increasing 2016 HCPLAN Demonstrates Value-Based Care Payments Increasing
2017 HCPLAN APM Demonstrates Value-Based Care Payments Increasing 2018 HCPLAN APM Demonstrates Value-Based Care Payments Increasing
2019 HCPLAN APM Demonstrates Value-Based Care Payments Increasing 2020 HCPLAN APM Demonstrates Value-Based Care Payments Increasing

 

The overall change from 2019 to 2020 was very small, with Categories 3 & 4 gaining most ground from Category 2, and Category 1 (FFS) moving very little. It will be interesting to see how 2021 measures up. 

 

Will Category 1 remain stalled at 39.3%, or will things continue shifting away from FFS? Will Categories 3 & 4 continue to take from Category 2, or will FFS give up a few of its dollars to VBC? We are grateful for the work of the LAN, and eager to see the next report. Optimistic, even!

 

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